Ships cross the Panama Canal in 2024. Nearly half of U.S. goods transported by ship go through the passageway.

Federico Rios/The New York Times/Redux

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GEOGRAPHY | WORLD NEWS

Could This Canal Run Dry?

In Panama, droughts have threatened one of the world’s most important trade routes. Is protecting it worth forcing thousands of people from their homes?

October 2025
By Lisa M. Herrington

Question: Who might benefit from Panama’s planned dam project? Who might suffer?

Question: Who might benefit from Panama’s planned dam project? Who might suffer?

Jim McMahon/Mapman®

A small village surrounded by lush green hills rests along the banks of the Río Indio in Panama. The village, Limón de Chagres, is home to roughly 2,300 people. They rely on the winding river for fishing, watering their crops, and getting around in canoes. But their way of life is now in jeopardy.

The Panama Canal, a global shipping route, lies about 40 miles away, and government officials plan to dam the Río Indio to support it. Blocking the river will create a new reservoir for the canal to draw water from. Panama officials say the project will safeguard the route’s water supply for the next 50 years.

A small village rests along the banks of the Río Indio in Panama. It is surrounded by lush green hills. Called Limón de Chagres, the village is home to roughly 2,300 people. They rely on the winding river for fishing, watering their crops, and getting around in canoes. But their way of life is now in jeopardy.

The Panama Canal is a global shipping route. It lies about 40 miles away. Government officials plan to dam the Río Indio to support it. Blocking the river will create a new reservoir for the canal to draw water from. Panama officials say the project will safeguard the route’s water supply for the next 50 years.

Martin Bernetti/AFP via Getty Images

Villagers navigate the Río Indio this past May to protest Panama’s dam project.

The canal is vital to the economy of the Central American nation. But the project, planned to start in 2027, will permanently flood Limón de Chagres as well as other Indigenous communities. Villagers are protesting the project, trying to protect the only homes they’ve ever known.

“We can’t live underwater,” Genaro Acevedo Jiménez, a local farmer, tells reporters. He has worked his land for decades. “This is all we have.”

The canal is vital to the economy of the Central American nation. But the project will permanently flood Limón de Chagres as well as other Indigenous communities. It is planned to start in 2027. Villagers are protesting the project. They are trying to protect the only homes they have ever known.

“We can’t live underwater,” Genaro Acevedo Jiménez, a local farmer, tells reporters. He has worked his land for decades. “This is all we have.”

The Panama Canal
Watch a video to learn more about the history of this canal.

Connecting the World

Panama is a prime spot for global trade. The country is an isthmus—a narrow land bridge. The Atlantic Ocean is on one side, the Pacific Ocean on the other. In the early 1900s, the United States built the canal to connect them. The shortcut saves ships going between the east and west coasts of the U.S. from having to sail around South America, cutting about 8,000 miles.

Today about 80 percent of global trade travels by sea. Roughly 5 percent of it passes through the canal, which the U.S. officially ceded to Panama in 1999. That works out to about 13,000 ships a year. The U.S. is the top user. Panama charges ships to cross the canal, generating about $3.2 billion in tolls in 2024 alone.

The canal is fed by two main reservoirs, Lake Gatún and Lake Alajuela. But a severe drought in 2023, along with El Niño weather patterns, threatened the reservoirs, resulting in some of the canal’s lowest water levels in nearly a century. Authorities had to limit ship traffic by more than a third.

Panama is a prime spot for global trade. The country is an isthmus—a narrow land bridge. The Atlantic Ocean is on one side. The Pacific Ocean is on the other. In the early 1900s, the United States built the canal to connect them. The shortcut saves ships going between the east and west coasts of the U.S. from having to sail around South America. It cuts about 8,000 miles.

Today about 80 percent of global trade travels by sea. Roughly 5 percent of it passes through the canal. That works out to about 13,000 ships a year. The U.S. officially ceded the canal to Panama in 1999. And the U.S. is the top user. Panama charges ships to cross the canal. That generated about $3.2 billion in tolls in 2024 alone. 

The canal is fed by two main reservoirs. They are Lake Gatún and Lake Alajuela. But a severe drought in 2023 threatened the reservoirs. So did El Niño weather patterns. That resulted in some of the canal’s lowest water levels in nearly a century. Authorities had to limit ship traffic by more than a third.

Why Does the Panama Canal Need So Much Water?

The center of the Panama Canal runs through Lake Gatún, which sits 85 feet above sea level. So ships need to be raised and lowered to cross it.

The canal has a system of locks—compartments with gates—that functions like a staircase (see diagram, below). The locks flood with water to lift ships, in steps, from the ocean to the height of Lake Gatún. Ships then travel across the lake before descending through more locks to the opposite ocean.

The process requires 52 million gallons of water for a single ship to cross. That’s enough water to fill approximately 80 Olympic-size swimming pools.

The center of the Panama Canal runs through Lake Gatún, which sits 85 feet above sea level. So ships need to be raised and lowered to cross it.

The canal has a system of locks—compartments with gates—that functions like a staircase (see diagram, below). The locks flood with water to lift ships, in steps, from the ocean to the height of Lake Gatún. Ships then travel across the lake before descending through more locks to the opposite ocean.

The process requires 52 million gallons of water for a single ship to cross. That’s enough water to fill approximately 80 Olympic-size swimming pools.

Spencer Sutton/Science Source

The restrictions on canal travel disrupted the movement of goods around the world, including in the U.S. That led to delivery delays and higher prices.

While the rains returned in May 2024 and daily traffic has rebounded, officials in Panama say they need to plan for future droughts. Adding another reservoir could keep the canal running even during dry spells and potentially let more ships cross year-round. It would also serve as a source of drinking water for Panama’s people, they say.

“The time to act is sooner rather than later,” Ricaurte Vásquez Morales, the administrator of the Panama Canal Authority, said in a television interview last year.

The restrictions on canal travel disrupted the movement of goods around the world, including in the U.S. That led to delivery delays and higher prices.

The rains returned in May 2024. And daily traffic has rebounded. But officials in Panama say they need to plan for future droughts. Adding another reservoir could keep the canal running even during dry spells. And it could potentially let more ships cross year-round. It would also serve as a source of drinking water for Panama’s people, they say.

“The time to act is sooner rather than later,” Ricaurte Vásquez Morales said in a television interview last year. He is the administrator of the Panama Canal Authority.

Andrea Salcedo

Genaro Acevedo Jiménez stands outside his home in Limón de Chagres this past March, next to a sign protesting the dam.

Defending Their Land 

Hurtado/Bloomberg via Getty Images

Villagers use horses to cross the Río Indio in 2023.

Damming the Río Indio, however, could displace more than 3,000 people, by some estimates. Their homes would be permanently submerged in water. Another 10,000 people could be affected to some extent, news reports say.

This isn’t an issue that only Panama has faced. As many as 80 million people around the world were displaced by dam projects in the 20th century alone.

But leaving is incomprehensible for the people of Limón de Chagres, whose lives are entwined with the river. For generations, they have used the Río Indio to support their livestock and grow crops, such as maize and bananas. And they get around in canoes or on horseback. The village didn’t even have a paved road until a few years ago.

The Canal Authority says it will compensate people who need to be relocated, although it is still in the process of determining where those people will go. But the villagers fear they will lose their ability to earn a living without their land and the river that flows through it. They also worry that not everyone will be compensated. Many people don’t have paperwork proving they own the land they live on.

This past May, hundreds of residents gathered at the river to protest the dam. And they continue to speak out about their plight.

Lifelong resident Digna Benita, 60, doesn’t want to abandon her roots. As a child, she played in the Río Indio while her father fished. The river, she says, “is my whole life.”

But damming the Río Indio could displace more than 3,000 people, by some estimates. Their homes would be permanently submerged in water. Another 10,000 people could be affected to some extent, news reports say.

This is not an issue that only Panama has faced. As many as 80 million people around the world were displaced by dam projects in the 20th century alone.

But leaving is incomprehensible for the people of Limón de Chagres. Their lives are entwined with the river. For generations, they have used the Río Indio to support their livestock. They have used it to grow crops like maize and bananas. And they get around in canoes or on horseback. The village did not even have a paved road until a few years ago. 

The Canal Authority says it will compensate people who need to be relocated. But it is still in the process of determining where those people will go. The villagers fear they will lose their ability to earn a living without their land and the river that flows through it. They also worry that not everyone will be compensated. Many people do not have paperwork proving they own the land they live on.

This past May, hundreds of residents gathered at the river to protest the dam. And they continue to speak out about their plight. 

Lifelong resident Digna Benita, 60, does not want to abandon her roots. As a child, she played in the Río Indio while her father fished. The river, she says, “is my whole life.” 

YOUR TURN

A Global Waterway

This is a political map. It shows the location of the Panama Canal. Read about political maps below, then answer the questions.

Jim McMahon/Mapman®

Political maps show boundaries of countries and other places. They also include the location of capitals, major cities, and bodies of water such as rivers and oceans.

1. What is Panama’s capital?

2. In which direction would you travel to get from that city to Limón de Chagres?

3. Through which labeled bodies of water does the Panama Canal cross?

4. About how many straight-line miles separate Limón de Chagres from Colón? 

5. Which country borders Panama to the east?


YOUR TURN

A Global Waterway

This is a political map. It shows the location of the Panama Canal. Read about political maps below, then answer the questions.

Jim McMahon/Mapman®


Political maps show boundaries of countries and other places. They also include the location of capitals, major cities, and bodies of water such as rivers and oceans.

1. What is Panama’s capital?

2. In which direction would you travel to get from that city to Limón de Chagres?

3. Through which labeled bodies of water does the Panama Canal cross?

4. About how many straight-line miles separate Limón de Chagres from Colón? 

5. Which country borders Panama to the east?

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